Deductions IHT400 Box 80

BusyLizzie1878

Looking for any advice re IHT400 Box 80. I’m joint Executor for my brother’s will. The IHT400 was recently submitted to HMRC. 

We are using a probate solicitor but have been given only a vague response to my question regarding a ‘deduction’ that’s already been recorded in Box 80. Tried contacting HMRC online call/chat but constantly on hold and can never get a response🙄

Briefly, brother owned 4 properties. One property is in the will to be left to his nephew (my son).  The property has a £23k+ outstanding mortgage on it. Solicitor says the property can only be inherited with the outstanding mortgage and my son has to take on the debt and pay off the mortgage himself. The outstanding mortgage of £23k has been recorded on the IHT400 form in Box 80 as a deduction. 

My understanding from reading the IHT400 guidance notes is that deductions have to meet a general condition that they are being paid by the estate. Since we know that my son is to take on the £23k mortgage debt, my question is will including it as a deduction in Box 80 be ‘over-claiming’ that deduction? (Brother wasn’t married so his estate has been stung for IHT bill c£190+k and if £23k is not to be included as a deduction the IH tax bill will go up by a further £9.2k.) 

What I don’t want is to be contacted further down the line by HMRC telling us we’ve underpaid the £9.2k inheritance tax. 

The sols response when I asked this question was that the £23k mortgage is to be recorded as a deduction and HMRC will tell us if we’ve over or underpaid (the IHT400 that’s been submitted makes no mention that it will be my son (not the estate) repaying the debt. 

Is it best to write to HMRC myself and tell them I know it’s my son who  will be repaying the £23k mortgage and not the estate?

Any thoughts? and apols if this rambles a bit…😊

Keep_pedalling

You won’t be over claiming, the deduction is for IHT purposes, HMRC are not concerned who meets the debt. You’re son has been left the house so that particular debt is secured against he he is therefor responsible for paying it if he plans to keep it.  If he is looking to sell then he can ask the administrator to sell the property pay off the mortgage and give him the net proceeds in cash. If he does not intend to live in the property and is not already a home owner this would prevent him loosing his first time buyer status.

BusyLizzie1878

Thanks so much for this, such a huge chunk of cash going to HMRC as it is!